The number of Americans filing new claims for unemployment benefits fell to a seven-month low last week, but the pace of decline has slowed and further improvement could be limited by a raging COVID-19 pandemic and lack of additional fiscal stimulus.
Other data on Thursday showed consumer prices were unchanged in October as moderate gains in the cost of food were offset by cheaper gasoline amid slack in the economy. The frail economy is one of the major challenges President-elect Joe Biden faces when he takes over from President Donald Trump in January.
Initial claims for state unemployment benefits fell by 48,000 to a seasonally adjusted 709,000 for the week ended Nov. 7. Data for the prior week was revised to show 6,000 more applications received than previously reported.
Despite claims dropping to their lowest since March, they remained above their peak of 665,000 during the 2007-2009 Great Recession. Weak demand, especially in the services sector, is forcing employers to shed workers. Layoffs could accelerate as new coronavirus cases explode across the country.
MILLIONS UNEMPLOYED
Unemployment claims peaked at a record 6.867 million in March. Much of the improvement in the labor market came from businesses recalling laid-off and furloughed workers as companies and the unemployed accessed their share of more than $3 trillion in government coronavirus relief.
But fiscal stimulus has run out, which will make it harder for the economy to generate enough jobs to absorb the millions of unemployed Americans. The number of people receiving benefits after an initial week of aid declined 436,000 to 6.786 million in the week ending Oct. 31. That partly reflected many people exhausting their six months of state benefits.
A total of 4.143 million people filed for extended unemployment benefits in the week ending Oct. 24, up 159,776 from the prior week. About 21.2 million people were receiving jobless benefits in late October.
INFLATION UNCHANGED
In the 12 months through October, the CPI climbed 1.2% after increasing 1.4% in September. Benign inflation could allow the Federal Reserve to keep its ultra-easy monetary policy for a long time to aid the recovery from the COVID-19 recession.
The so-called core CPI increased 1.6% on a year-on-year basis after gaining 1.7% in September.
The Fed's preferred inflation measure, the core personal consumption expenditures (PCE) price index rose 1.5% in the 12 months through September. The central bank has a 2% target, a flexible average. October's core PCE price index data is scheduled to be released at the end of this month.
Reference: CNBC
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